the CCH wildcard - from previous newsCampbell Resources Announces Its Fourth Quarter and Annual Results for 2005
09:44 EST Tuesday, March 14, 2006
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NOTES RECEIVABLE AND DEFERRED ROYALTY
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In the 2001 and 2002 fiscal years, the Company sold a $32.4 million royalty on future production from the Joe Mann Mine in consideration of cash and notes receivables. As at June 30, 2005 the notes receivable of $25.4 million, bearing interest of 6.25% and maturing February 2011 were outstanding. The royalty carried forward was $24.9 million. The Company having placed itself under the Companies' Creditors Arrangement Act and therefore in default, the royalty unit holders exercised their call right to require the Company to buy back the units. The buyback price is the fair market value at the date of the default, June 30, 2005. An independent engineering firm, evaluated the value of the royalty at $5.9 million and the Company therefore recorded a gain of $19.0 million. This buyback price was applied against the notes receivable. The balance remaining of these notes is $17.4 million and is now due. Giving the uncertainty regarding the collection of these notes from the unitholders, the Company has recorded an allowance for doubtful accounts for the full amount. Each unitholder has been notified of the obligation to pay the due amount. The Company intends to take legal measures to recover the amounts.